As the year draws to a close, many local Chinese Communist Party (CCP) officials in China have lowered their budget revenue targets for this year.
According to a recent report from China Business News, many provinces and cities reported lower-than-expected fiscal revenue due to the economic downturn, the impact of the COVID pandemic, and the property market collapse.
Various localities, to balance fiscal revenue and spending towards the end of the year, are forced to adjust their budget projections for this year.
A director of a finance bureau in a central province said his province is under tremendous fiscal pressure. He said that the province’s general public budget was reduced by more than $14 million (100 million yuan) from the beginning of the year, and local authorities fund revenue has been reduced by nearly half.
An official from the finance bureau of an eastern city also said that the city’s authority is also considering reducing the revenue budget target. The main reasons are the decline in tax rebates, tax cuts, and the economic downturn resulting in decreased revenue from primary tax sources.
The Business News report citing a western province source said that the province has recently reduced the revenue target, including land sale revenue.
Another local finance director revealed that the local income from land transfer and non-tax revenue had fallen sharply. Meanwhile, fiscal spending and debt service pressure continue to increase, and it is tough to balance the budgets.
Many local CCP authorities have struggled to meet the budget targets set at the beginning of the year.
Local authorities’ finances have deteriorated sharply because of the impact of the COVID pandemic, the downward pressure from an ailing economy, the package of tax rebates, tax cuts, and tax reductions, and the downturn in the property market.
Data from China’s Ministry of Finance showed that, in the first 10 months of this year, the country’s local general public budget revenue decreased by 3.6% year-on-year, and the budget revenue of local authority funds dropped 24.3% from the same period last year.
Judging from that actual performance, for local authorities to achieve their full-year budget target will take a lot of work.
Some places, such as Zunyi City and Tongren City in Guizhou Province, Honghe Prefecture in Yunnan Province, and Yongkang City in Zhejiang Province, have revised their budget revenue targets downward by at least $140 million.